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Irish Commercial Court Finds a Case of Agile Development not Breach of Copyright

DATE: 23.06.2011

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In October 2010 Mr Justice Feeney delivered his judgment in Koger Inc & Anor. v O’ Donnell & Ors ([2010] IEHC 350). The judgment demonstrates the Commercial Court’s willingness to recognise the realities of software development today, including the use of agile development methods, which may increase the speed of software development.

Background

The plaintiffs, Koger Inc., claimed that the defendants were in breach of copyright and breach of confidence. It was claimed the defendants had infringed the copyright of Koger in a computer software program known as “NTAS” which was developed for customers in the fund administration industry. The defendants, former employees of Koger, established the company HWM Financial Solutions Limited and created a transfer agency system known as “ManTra”.

The Court concluded that it was satisfied that the defendants in developing ManTra did not use a copy of NTAS either as a functional and/or design specification and that there was no evidence that the defendants had access to or used an unauthorised copy of NTAS. It was noted that the evidence provided by the plaintiffs to support a claim that ManTra was developed in an excessively short period of time and to a quality that could not have been achieved other than by access to a copy of NTAS was based upon flawed deduction and reasoning. The Court held that this made no real or proper allowance for the knowledge, experience and expertise of the individual defendants in the development of ManTra.

Experts Reports

Both the plaintiffs and the defendants engaged experts to review the evidence. The terms of reference for the expert review set out three questions to be answered:

Does the defendants’ ManTra product contain source code that appears to be copied from the plaintiffs’ NTAS product and, if so, are these copied elements substantial in nature?

Do the change history records (including the speed and manner in which such changes were implemented by reference to the programming techniques employed and number of programmers engaged) support a conclusion that the defendants’ ManTra product was substantially copied from the defendants’ NTAS product?

Does the defendants’ ManTra product copy in a substantial way any functional elements and/or look and feel specific to the plaintiffs’ NTAS product that are capable of protection under the Copyright and Related Rights Act 2000?

Commercial Court Issues

Conclusion

The Court found that the plaintiffs failed to establish that the defendants were in breach of copyright or confidence and the claim was dismissed. The Court favoured the account given by the defendants and it noted its disapproval of the manner in which the plaintiffs prosecuted their claims stating that they “were prepared to use a set of facts in such a manner as to manipulate them for present advantage without regard to the real truth”.

Speed of development of ManTra
The plaintiffs claimed that the defendants had access to and use of an unauthorised copy of NTAS. The plaintiffs were relying on evidence as to what they considered to be the implausible development speed of ManTra. In his report, one of the plaintiffs' experts conducted an analysis from the documents available to him which led him to the conclusion that, given the quality of the ManTra product and the development and design of the source code, both of which he rated very highly, the pace of development was extraordinary. However, the Court noted that in limiting the consideration of the speed of development to such documents, records and data as were available, the plaintiffs’ expert had failed to consider the full picture. The expert report commented on a two week period where there was very little email activity however what was in fact taking place was agile development with all the developers in one location directly communicating with one another. The plaintiffs’ expert concluded that the speed of the development was such that the persons developing ManTra had to have access to and use of NTAS. However the Court was provided with no clear or convincing evidence of this.

Literal Copying
Initially the plaintiffs claimed that there was literal copying of their intellectual property rights and this claim was maintained throughout the plaintiffs’ evidence until the date that their expert was cross-examined on the point in Court (during which he clarified that he did not approach the review on the basis of literal copying). The judge noted that the position should have been disclosed to the Court and for it to be withheld until an acknowledgement was obtained in cross-examination demonstrated a failure to be fully frank with the Court. The judge acknowledged that there was no indication that there was any knowledge on the part of the plaintiffs’ solicitors or counsel as to the experts’ lack of belief in literal copying up until he acknowledged same in Court. However it is clear from the plaintiffs’ expert’s answer that his belief that there was no literal copying was his initial position which would have dated from the time of his first report.

Technical architecture of the design
The Court noted that the evidence was that the technical architecture of the design of both NTAS and ManTra was different. It was confirmed by the plaintiffs’ expert during cross-examination that, in his view, NTAS was used as a visual reference point and it had not involved a function by function reference point. The Court held that any overlap in functionality which is to be found in the two products is not indicative of copying or design by reference but is rather an overlap that is to be expected in two products which are both aimed at the hedge fund transfer accounting business.

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